Posted on May 15, 2012If policy-makers truly cared about the national deficit, they would do nothing for the next year.
They would allow the Bush tax cuts to expire. They would allow all of the tax extenders to run out. They would allow the defense sequester to kick in. They would let all of the other spending cuts, as envisioned by the budget agreement from last year, go into effect. And they wouldn’t increase the debt limit, making the government break contracts and not off its many creditors.
If all of that happened, we would make tremendous progress towards cutting our national debt. It would amount to the largest tax increase and one of the largest spending cuts in our national history.
Of course, the end result would also be an economic catastrophe. Our economy would collapse in a recession or a depression. The jobless rate would double. Economic output would decline. It would be one hell of a mess.
No serious politician would want to see this happen to our country or to the world economy.
But, outside the House Republicans, who actually passed a reconciliation bill last week that came up with an alternative to the deep spending cuts, a vote that garnered little notice outside the Halls of Congress, the political class is doing nothing about this coming financial train wreck.
Yesterday, John Snow, the former Treasury Secretary, rang the alarm bells in pages of the Wall Street Journal, about the impending doom that will come with the expiration of the Bush tax cuts. But outside that one lonely voice, nobody in the media has made much of it.
The conventional wisdom is that Congress and the President will somehow reach agreement on all of these items once the election is done. You see, Mr. Obama can’t really be bothered with actually governing. He has to raise money with the likes of George Clooney and countless others like him, because Wall Street just isn’t giving as much as they used to. And raising money takes times and energy.
Indeed, President Obama has already done more fundraisers at this moment in his tenure than any other President in history did in all four years of their first term. If it seems like the campaign has started pretty early, that is because that is all the President has been doing.
But what if Mr. Obama loses his election, and in demonstration of his unhappiness with his loss, he decided that he won’t sign anything? Or what if John Boehner loses his majority, and suddenly he can’t get the votes to pass anything? Or what if the Senate ends up in tie, and neither Senators Reid or McConnell can figure out who has the power of the gavel.
All of these scenarios are possible. And all could lead to a truly lame, lame-duck.
Lame duck sessions of Congress are vestige of the old days, when transportation delays made it hard for the members of Congress to gather in a timely fashion after an election. Now, they are used as an excuse to avoid the wrath of the voters.
But the President and the Congress shouldn’t wait until it is too late.
The voters hate the political class not because they make the tough decisions, but because they all too often cynically try to avoid them. Mr. Obama is the worst offender. He knows that the economy can’t sustain the jolt to the system of systemic inaction on some of the pending business facing the Federal government.
Yet, instead of convening Congressional leaders and hammering out deals, he cavorts with George Clooney and campaigns to get himself reelected. The President shouldn’t wait for the Lame Duck to act. The end result could be Lameggedon.